OPINION:
This year New Zealand will achieve a historic breakthrough on freshwater management. We'll begin setting effective quality and quantity standards in all river catchments.

Over time, these bottom lines will drive better environmental performances by all sectors - rural and urban - and set farming on a more sustainable and profitable path. But you wouldn't know so from recent comments from three authoritative voices.

"Even with best practice mitigation, the large-scale conversion of more land to dairy farming will generally result in more degraded fresh water," reported Parliamentary Commissioner for the Environment Jan Wright.

Dairying was close to maxing out, they argued. The only solutions were less-intensive dairying or financial imposts on it to repair dairying's damage to the environment.

The three failed to take account, however, of a fundamental shift in understanding, principle and practice by farmers, other water users and government over the past five years.

They all now accept the setting of bottom lines on water quality, allocation and nutrient levels in every river in the country.

Legislation will empower communities in each catchment to use the limits as tools for better collaboration on land use and environmental management.

As a result of accepting these limits, dairy farmers will reduce their environmental impact, improve their economic efficiency and achieve a moderate but sustainable growth in milk volume.

Given the latter constraint, they will push harder to add value to their milk.

Setting such limits has been one of the key drivers of the transformation of the Danish pig and dairy industries in the past 20 years. They massively innovated on farm to clean up their environmental impact yet expand production, and they innovated heavily downstream to increase the value of their production.

The possibility of such progress in New Zealand has been very hard-won. These issues of water quality, allocation and standards are extremely complex, even more so given the vast range of terrain and climate. They defeated the previous Labour and National governments' efforts to reform water policy in the face of rapidly expanding dairying.

The turning point came in 2008 with the creation of the Land and Water Forum. This initiative of the Environmental Defence Society brought together 62 organisations with deeply vested interests in water - farmers, foresters, electricity generators, industrial users, recreational users, environmental groups councils.

Through an intensive collaborative process they found a remarkable degree of common ground on how to reform regulation for the good of all. Their three reports 2010-12 have been driving policy development since by the National-led government.

First in 2011 the government developed the National Policy Statement for Freshwater Management. This fundamental piece of the RMA had been missing from the legislation since it was passed in 1991.

Next the Key government began developing a regulatory structure which, when completed, will give effect to the policy statement.

Crucial to the structure is the National Objectives Framework for Freshwater. This lays out the range of measures such as nitrate levels, clarity and water flows by which water quality will be judged.

The NOF is very complex because it must account for great variation in types of rivers. Moreover, it must strike a balance between being comprehensive but still practical for councils to use.

The first draft, in November, broadly met the recommendations of the Land and Water Forum. Some proposed measures, though, were weaker than some members had expected. Moreover, macroinvertebrates (small water-borne creatures) were missing from the list.

All of these measures will not be expressed in regulations as fixed values applicable across the country. Rather, each will have varying levels expressed in four bands, A, B, C and D.

Within a catchment, local communities will work with their regional council to create water management plans that meet their aspirations. For example, one tributary might be valued for swimming and therefore have a higher ranking on some attributes than another stretch of water that has a high economic value.

The regulations won't allow a D rating on any attribute to persist. The community and council must work on improving it. The communities will be able to make choices across the other grades to reflect the outcomes they want.

This emphasis on collaboration is critical to the success of the new regulatory regime. Horizons Regional Council is a salutary lesson in the damage caused when it's missing.

Confronted by the very poor state of the Manawatu River and lacking the right regulatory tools to put it right because of the failure of past governments, the council designed its own system, One Plan, to clean up the river and other catchments across its territory.

Initially One Plan focused almost exclusively on dairying. But if that sector had borne all the cuts in nitrate needed to restore water quality the economic impact for farmers and the wider community would have been very heavy. Farmers resorted to the courts to try to halt it. Politics turned toxic and community relationships broke down.

Consequently, the analysis was widened to all rural and urban sectors, since they were contributing to the problem. For example, Palmerston North invested heavily in upgrading its sewage treatment. Forestry and sheep & beef operations, which also contribute to nitrate leaching, though at much lower levels than dairying, can make changes, too.

Acting together, all these water users can help reduce nitrate levels in the Manawatu over time but still leave capacity within that nitrate budget for dairying to continue and possibly expand.

Around the country there are other early examples of such collaborative approaches to land use and water quality. Two of the best examples are the Lake Rotorua Primary Producers Collective, established in 2011, and the zone committees being developed under the Canterbury Water Management Strategy.

This is the crucial year for creating a robust national system for replicating these successes widely. There is still a great deal of work to do on design, and implementation will take years. But there is every chance the system will deliver higher environmental and economic outcomes.

All this is only possible because of the fundamental culture shift to collaboration among water users that the Land and Water Forum enabled. Working together, these stakeholders will prove the doomsayers wrong.